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ENBANC

[G.R.No.122226.March25,1998]

UNITED PEPSICOLA SUPERVISORY UNION (UPSU), petitioner, vs. HON.


BIENVENIDO E. LAGUESMA and PEPSICOLA PRODUCTS, PHILIPPINES,
INC.respondents.
DECISION
MENDOZA,J.:

Petitionerisaunionofsupervisoryemployees.ItappearsthatonMarch20,1995theunionfileda
petitionforcertificationelectiononbehalfoftheroutemanagersatPepsiColaProductsPhilippines,
Inc.However, its petition was denied by the medarbiter and, on appeal, by the Secretary of Labor
andEmployment,onthegroundthattheroutemanagersaremanagerialemployeesand,therefore,
ineligible for union membership under the first sentence of Art. 245 of the Labor Code, which
provides:
Ineligibilityofmanagerialemployeestojoinanylabororganizationrightofsupervisoryemployees.
Managerialemployeesarenoteligibletojoin,assistorformanylabororganization.Supervisory
employeesshallnotbeeligibleformembershipinalabororganizationoftherankandfileemployees
butmayjoin,assistorformseparatelabororganizationsoftheirown.
Petitioner brought this suit challenging the validity of the order dated August 31, 1995, as
reiterated in the order dated September 22, 1995, of the Secretary of Labor and Employment. Its
petition was dismissed by the Third Division for lack of showing that respondent committed grave
abuse of discretion. But petitioner filed a motion for reconsideration, pressing for resolution its
contention that the first sentence of Art. 245 of the Labor Code, so far as it declares managerial
employees to be ineligible to form, assist or join unions, contravenes Art. III 8 of the Constitution
whichprovides:
Therightofthepeople,includingthoseemployedinthepublicandprivatesectors,toformunions,
associations,orsocietiesforthepurposesnotcontrarytolawshallnotbeabridged.
Forthisreason,thepetitionwasreferredtotheCourtenbanc.
TheIssuesinthisCase
Two question are presented by the petition: (1) whether the route managers at PepsiCola
ProductsPhilippines,Inc.aremanagerialemployeesand(2)whetherArt.245,insofarasitprohibits
managerial employees from forming, joining or assisting labor unions, violates Art. III, 8 of the
Constitution.
Inresolvingtheseissuesitwouldbeusefultobeginbydefiningwhoaremanagerialemployees
andconsideringthetypesofmanagerialemployees.

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TypesofManagerialEmployees
The term manager generally refers to anyone who is responsible for subordinates and other
organizationresources.[1]Asaclass,managersconstitutethreelevelsofapyramid:
TopManagement
_________________
MiddleManagement
_________________
FirstLine
Management
(alsocalledSupervisor)
____________________
____________________
Operatives
OrOperatingEmployees
FIRSTLINEMANAGERSThelowestlevelinanorganizationatwhichindividualsareresponsiblefor
theworkofothersiscalledfirstlineorfirstlevelmanagement.Firstlinemanagersdirectoperating
employeesonlytheydonotsuperviseothermanagers.Exampleoffirstlinemanagersarethe
foremanorproductionsupervisorinamanufacturingplant,thetechnicalsupervisorinaresearch
department,andtheclericalsupervisorinalargeoffice.Firstlevelmanagersareoftencalled
supervisors.
MIDDLEMANAGERSThetermmiddlemanagementcanrefertomorethanonelevelinan
organization.Middlemanagersdirecttheactivitiesofothermanagersandsometimesalsothoseof
operatingemployees.Middlemanagersprincipalresponsibilitiesaretodirecttheactivitiesthat
implementtheirorganizationspoliciesandtobalancethedemandsoftheirsuperiorswiththe
capacitiesoftheirsubordinates.Aplantmanagerinanelectronicsfirmisanexampleofamiddle
manager.
TOPMANAGERSComposedofacomparativelysmallgroupofexecutives,topmanagementis
responsiblefortheoverallmanagementoftheorganization.Itestablishesoperatingpoliciesand
guidestheorganizationsinteractionswithitsenvironment.Typicaltitlesoftopmanagersarechief
executiveofficer,president,andseniorvicepresident.Actualtitlesvaryfromoneorganizationto
anotherandarenotalwaysareliableguidetomembershipinthehighestmanagementclassification.
[2]

Ascanbeseenfromthisdescription,adistinctionexistbetweenthosewhohavetheauthorityto
devise,implementandcontrolstrategicandoperationalpolicies(topandmiddlemanagers)andthose
whosetaskissimplytoensurethatsuchpolicesarecarriedoutbytherankandfileemployeesofan
organization (firstlevel managers/supervisors). What distinguishes them from the rankand file
employeesisthattheyactintheinterestoftheemployerinsupervisingsuchrankandfileemployees.

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Managerialemployeesmaythereforebesaidtofallintotwodistinctcategories:themanagersper
se,whocomposetheformergroupdescribedabove,andthesupervisorswhoformthelattergroup.
Whether they belong to the first or second category, managers, visvis employers, are, likewise,
employees.[3]
The first question is whether route managers are managers are managerial employees or
supervisors.
PreviousAdministrativeDeterminationsoftheQuestionWhetherRouteManagersare
ManagerialEmployees
ItappearsthatthisquestionwasthesubjectoftwopreviousdeterminationsbytheSecretaryof
LaborandEmployment,inaccordancewithwhichthiscasewasdecidedbythemedarbiter.
In Case No. OSMA1031891, entitled Workerss Alliance Trade Union (WATU) v. PepsiCola
ProductsPhilippines,Inc.,decidedonNovember13,1991,theSecretaryofLaborfound:
Weexaminedcarefullythepertinentjobdescriptionofthesubjectemployeesandotherdocumentary
evidenceonrecordvisvisparagraph(m),Article212oftheLaborCode,asamended,andwefind
thatonlythoseemployeesoccupyingthepositionofroutemanagerandaccountingmanagerare
managerialemployees.Theresti.e.qualitycontrolmanager,yard/transportmanagerandwarehouse
operationsmanageraresupervisoryemployees.
Toqualifyasmanagerialemployee,theremustbeaclearshowingoftheexerciseofmanagerial
attributesunderparagraph(m),Article212oftheLaborCodeasamended.Designationsortitlesof
positionsarenotcontrolling.Intheinstantcase,nothingonrecordwillsupporttheclaimthatthe
qualitycontrolmanager,yard/transportmanagerandwarehouseoperationsmanagerarevestedwith
saidattributes.Thewarehouseoperationsmanager,forexample,merelyassiststheplantfinance
managerinplanning,organizing,directingandcontrollingallactivitiesrelativetodevelopmentand
implementationofaneffectivemanagementcontrolinformationsystematthesaleoffices.The
exerciseofauthorityofthequalitycontrolmanager,ontheotherhand,needstheconcurrenceofthe
manufacturingmanager
Astotheroutemanagersandaccountingmanager,weareconvincedthattheyaremanagerial
employees.Theirjobdescriptionsclearlyrevealso.
OnJuly6,1992,thisfindingwasreiteratedinCaseNo.OSA37192,entitledInRe:Petitionfor
Direct Certification and/or Certification ElectionRoute Managers/Supervisory Employees of Pepsi
ColaProductsPhils.Inc.,asfollows:
Theissuebroughtbeforeusisnotoffirstimpression.Atonetime,wehadtheoccasiontoruleupon
thestatusofroutemanagerinthesamecompanyvisavistheissueastowhetherornotitis
supervisoryemployeeoramanagerialemployee.InthecaseofWorkersAllianceTradeUnions
(NATU)vs.PepsiColaProducts,Phils.,Inc.(OSMAA1031891),15November1991,weruledthat
aroutemanagerisamanagerialemployeewithinthecontextofthedefinitionofthelaw,andhence,
ineligibletojoin,formorassistaunion.WehaveoncemorepasseduponthelogicofourDecision
aforecitedinthelightoftheissuesraisedintheinstantappeal,aswellastheavailabledocumentary
evidenceonhand,andhavecometotheviewthatthereisnocogentreasontodepartfromourearlier
holding.RouteManagersare,bytheverynatureoftheirfunctionsandtheauthoritytheywieldover
theirsubordinates,managerialemployees.TheprescriptionfoundinArt.245oftheLaborCode,as
amendedtherefore,clearlyappliestothem.[4]4

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Citing our ruling in Nasipit Lumber Co. v. National Labor Relations Commission,[5]5 however,
petitioner argues that these previous administrative determinations do not have the effect of res
judicatainthiscase,because"laborrelationsproceedings"are"nonlitigiousandsummaryinnature
without regard to legal technicalities."[6] Nasipit Lumber Co. involved a clearance to dismiss an
employeeissuedbytheDepartmentofLabor.Thequestionwaswhetherinasubsequentproceeding
forillegaldismissal,theclearancewasresjudicata.Inholdingitwasnot,thisCourtmadeitclearthat
itwasreferringtolaborrelationsproceedingsofanonadversarycharacter,thus:
TherequirementofaclearancetoterminateemploymentwasacreationoftheDepartmentoflaborto
carryouttheLaborCodeprovisionsonsecurityoftenureandterminationofemployment.The
proceedingsubsequenttothefilingofanapplicationforclearancetoterminateemploymentwas
outlinedinBookV,RuleXIVoftheRulesandRegulationsImplementingtheLaborCode.Thefactthat
saidruleallowedaprocedurefortheapprovaloftheclearancewithorwithouttheoppositionofthe
employeeconcerned(Secs.7&8),demonstratesthenonlitigiousandsummarynatureofthe
proceeding.Theclearancerequirementwasthereforenecessaryonlyasanexpeditiousshield
againstarbitrarydismissalwithouttheknowledgeandsupervisionoftheDepartmentofLabor.Hence,
adulyapprovedclearanceimpliedthatthedismissalwaslegalorforcause(Sec.2).[7]v.National
LaborRelationsCommission,177SCRA93,100(1989).7
Butthedoctrineofresjudicatacertainlyappliestoadversaryadministrativeproceedings.Asearly
as1956,inBrillantesv.Castro,[8]8wesustainedthedismissalofanactionbyatrialcourtonthebasis
ofaprioradministrativedeterminationofthesamecasebytheWageAdministrationService,applying
the principle of res judicata. Recently, in Abad v. NLRC[9]9 we applied the related doctrine of stare
decisisinholdingthatthepriordeterminationthatcertainjobsattheAtlanticGulfandPacificCo.were
projectemploymentswasbindinginanothercaseinvolvinganothergroupofemployeesofthesame
company. Indeed, in Nasipit Lumber Co., this Court clarified toward the end of its opinion that "the
doctrineofresjudicataapplies...tojudicialorquasijudicialproceedingsandnottotheexerciseof
administrativepowers."[10]v.NationalLaborRelationsCommission,supranote7.10Nowproceedings
forcertificationelection,suchasthoseinvolvedinCaseNo.OSMA1031891andCaseNo.OSA
37192,arequasijudicialinnatureand,therefore,decisionsrenderedinsuchproceedingscanattain
finality.[11]v. B.F. Goodrich (Marikina Factory) Confidential and Salaries Employees UnionNATU, 49
SCRA532(1973).11
Thus, we have in this case an expert's view that the employees concerned are managerial
employeeswithinthepurviewofArt.212whichprovides:
(m)"managerialemployee"isonewhoisvestedwithpowersorprerogativestolaydownandexecute
managementpoliciesand/ortohire,transfer,suspend,layoff,recall,discharge,assignordiscipline
employees.Supervisoryemployeesarethosewho,intheinterestoftheemployer,effectively
recommendsuchmanagerialactionsiftheexerciseofsuchauthorityisnotmerelyroutinaryorclerical
innaturebutrequirestheuseofindependentjudgment.Allemployeesnotfallingwithinanyofthe
abovedefinitionsareconsideredrankandfileemployeesforpurposesofthisBook.
Attheveryleast,theprincipleoffinalityofadministrativedeterminationcompelsrespectforthefinding
of the Secretary of Labor that route managers are managerial employees as defined by law in the
absence of anything to show that such determination is without substantial evidence to support it.
Nonetheless, the Court, concerned that employees who are otherwise supervisors may wittingly or
unwittinglybeclassifiedasmanagerialpersonnelandthusdeniedtherightofselforganization,has
decidedtoreviewtherecordofthiscase.
DOLE'sFindingthatRouteManagersareManagerialEmployeesSupportedbySubstantial
EvidenceintheRecord
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TheCourtnowfindsthatthejobevaluationmadebytheSecretaryofLaborisindeedsupported
bysubstantialevidence.The nature of the job of route managers is given in a fourpage pamphlet,
preparedbythecompany,called"RouteManagerPositionDescription,"the pertinent parts of which
read:
A.BASICPURPOSE
AManagerachievesobjectivesthroughothers.
AsaRouteManager,yourpurposeistomeetthesalesplanandyouachievethisobjective
throughtheskillfulMANAGEMENTOFYOURJOBANDTHEMANAGEMENTOFYOUR
PEOPLE.
ThesethenareyourfunctionsasPepsiColaRouteManager.Withinthesefunctions
managingyourjobandmanagingyourpeopleyouareaccountabletoyourDistrictManager
fortheexecutionandcompletionofvarioustasksandactivitieswhichwillmakeitpossiblefor
youtoachieveyoursalesobjectives.
B.PRINCIPALACCOUNTABILITIES
1.0MANAGINGYOURJOB
TheRouteManagerisaccountableforthefollowing:
1.1SALESDEVELOPMENT
1.1.1Achievethesalesplan.
1.1.2Achievealldistributionandnewaccountobjectives.
1.1.3Developnewbusinessopportunitiesthrupersonalcontactswithdealers.
1.1.4Inspectandensurethatallmerchandizing[sic]objectivesareachievedinalloutlets.
1.1.5maintainandimproveproductivityofallcoolingequipmentandkiosks.
1.1.6Executeandcontrolallauthorizedpromotions.
1.1.7Developandmaintaindealergoodwill.
1.1.8Ensureallaccountscomplywithcompanysuggestedretailpricing.
1.1.9Studyfromtimetotimeindividualroutecoverageandproductivityforpossible
adjustmentstomaximizeutilizationofresources.
1.2Administration
1.2.1Ensuretheproperloadingofroutetrucksbeforecheckoutandthepropersortingof
bottlesbeforecheckin.
1.2.2Ensuretheupkeepofallroutesalesreportsandallotherrelatedreportsandforms
requiredonanaccurateandtimelybasis.
1.2.3Ensureproperimplementationofthevariouscompanypoliciesandproceduresincl.
butnotlimitedtoshakedownrouteshortageprogressivedisciplinesorting
spoilagescredit/collectionaccidentattendance.
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1.2.4Ensurecollectionofreceivablesanddelinquentaccounts.
2.0MANAGINGYOURPEOPLE
TheRouteManagerisaccountableforthefollowing:
2.1RouteSalesTeamDevelopment
2.1.1Conductrouteridestotrain,evaluateanddevelopallassignedroutesalesmenand
helpersatleast3daysaweek,tobesupportedbyrequiredrouteride
documents/reports&backcheck/spotcheckatleast2daysaweektobe
supportedbyrequireddocuments/reports.
2.1.2Conductsalesmeetingsandmorninghuddles.Trainingshouldfocusonthe
enhancementofeffectivesalesandmerchandizing[sic]techniquesofthe
salesmenandhelpers.Conductgrouptrainingatleast1houreachweekona
designateddayandofspecifictopic.
2.2CodeofConduct
2.2.1Maintainthecompany'sreputationthroughstrictadherencetoPCPPI'scodeof
conductandtheuniversalstandardsofunquestionedbusinessethics.[12]12
Earlier in this opinion, reference was made to the distinction between managers per se (top
managersandmiddlemanagers)andsupervisors(firstlinemanagers).That distinction is evident in
theworkoftheroutemanagerswhichsetsthemapartfromsupervisorsingeneral.Unlikesupervisors
who basically merely direct operating employees in line with set tasks assigned to them, route
managers are responsible for the success of the company's main line of business through
management of their respective sales teams. Such management necessarily involves the planning,
direction,operationandevaluationoftheirindividualteamsandareaswhichtheworkofsupervisors
doesnotentail.
Theroutemanagerscannotthuspossiblybeclassifiedasmeresupervisorsbecausetheirwork
doesnotonlyinvolve,butgoesfarbeyond,thesimpledirectionorsupervisionofoperatingemployees
to accomplish objectives set by those above them. They are not mere functionaries with simple
oversight functions but business administrators in their own right. An idea of the role of route
managers as managers per se can be gotten from a memo sent by the director of metro sales
operationsofrespondentcompanytooneoftheroutemanagers.Itreads:[13]
03April1995
To:CESART.REOLADA
From:REGGIEM.SANTOS
Subj:SALARYINCREASE
Effective01April1995,yourbasicmonthlysalaryofP11,710willbeincreasedtoP12,881or
anincreaseof10%.Thisrepresentstheaddedmanagerialresponsibilitiesyouwillassumedue
totherecentrestructuringandstreamliningofMetroSalesOperationsbroughtaboutbythe
continuouslossesforthelastnine(9)months.
Letmeremindyouthatforouroperationstobeprofitable,wehavetosustaintheintensityand
momentumthatyourgroupandyourselfhaveshownlastMarch.Youjusthavetodeliverthe
desiredvolumetargets,betternegotiatedconcessions,rationalizedsustainingdeals,
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eliminateorreducedoverdues,improvedcollections,morecashaccounts,controlled
operatingexpenses,etc.Also,basedontheagreedsettargets,yourmonthlyperformancewill
becloselymonitored.
Youhaveproveninthepastthatyourcapableofachievingyourtargetsthrubetter
planning,managingyourgroupasafightingteam,andthruaggressiveselling.Iam
lookingforwardtoyoursuccessandIexpectthatyoujusthavetoexertyourdoublybest
inturningaroundouroperationsfromalosingtoaprofitableone!
HappySelling!!
(Sgd.)R.M.SANTOS
The plasticized card given to route managers, quoted in the separate opinion of Justice Vitug,
although entitled "RM's Job Description," is only a summary of performance standards. It does not
show whether route managers are managers per se or supervisors. Obviously, these performance
standards have to be related to the specific tasks given to route managers in the fourpage "Route
Manager Position Description," and, when this is done, the managerial nature of their jobs is fully
revealed.Indeed,ifany,thecardindicatesthegreatlatitudeanddiscretiongiventoroutemanagers
from servicing and enhancing company goodwill to supervising and auditing accounts, from trade
(new business) development to the discipline, training and monitoring of performance of their
respectivesalesteams,andsoforth,iftheyaretofulfillthecompany'sexpectationsinthe"keyresult
areas."
Article 212(m) says that "supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such authority is not merely
routinaryorclericalinnaturebutrequirestheuseofindependentjudgment."Thus,theironlypoweris
to recommend. Certainly, the route managers in this case more than merely recommend effective
managementaction.Theyperformoperational,humanresource,financialandmarketingfunctionsfor
thecompany,allofwhichinvolvethelayingdownofoperatingpoliciesforthemselvesandtheirteams.
Forexample,withrespecttomarketing,routemanagers,inaccordancewithB.1.1.1toB.1.1.9ofthe
Route Managers Job Description, are charged, among other things, with expanding the dealership
baseoftheirrespectivesalesareas,maintainingthegoodwillofcurrentdealers,anddistributingthe
company'svariouspromotionalitemsastheyseefit.Itisdifficulttoseehowsupervisorscanbegiven
suchresponsibilitywhenthisinvolvesnotjusttheroutinesupervisionofoperatingemployeesbutthe
protectionandexpansionofthecompany'sbusinessvisavisitscompetitors.
While route managers do not appear to have the power to hire and fire people (the evidence
shows that they only "recommended" or "endorsed" the taking of disciplinary action against certain
employees),thisisbecausethisisafunctionoftheHumanResourcesorPersonnelDepartmentof
the company.[14]14 And neither should it be presumed that just because they are given set
benchmarkstoobserve,theyareipsofactosupervisors.Adequatecontrolmethods(asembodiedin
suchconceptsas"ManagementbyObjectives[MBO]"and"performanceappraisals")whichrequirea
delineation of the functions and responsibilities of managers by means of ready reference cards as
here, have long been recognized in management as effective tools for keeping businesses
competitive.
Thisbringsustothesecondquestion,whetherthefirstsentenceofArt.245oftheLaborCode,
prohibiting managerial employees from forming, assisting or joining any labor organization, is
constitutionalinlightofArt.III,8oftheConstitutionwhichprovides:
Therightofthepeople,includingthoseemployedinthepublicandprivatesectors,toformunions,
associations,orsocietiesforpurposesnotcontrarytolawshallnotbeabridged.
As already stated, whether they belong to the first category (managers per se) or the second
category (supervisors), managers are employees. Nonetheless, in the United States, as Justice
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Puno'sseparateopinionnotes,supervisorshavenorighttoformunions.Theyareexcludedfromthe
definition of the term "employee" in 2(3) of the LaborManagement Relations Act of 1947.[15]v. Bell
AerospaceCo.,416U.S.281,n11,40L.Ed.2d134,147,n.11(1974),thus:
Supervisorsaremanagementpeople.Theyhavedistinguishedthemselvesintheirwork.Theyhavedemonstratedtheir
abilitytotakecareofthemselveswithoutdependinguponthepressureofcollectiveaction.Nooneforcedthemtobecome
supervisors. They abandoned the "collective security" of the rank and file voluntarily, because they believed the
opportunities thus opened to them to be more valuable to them than such "security".It seems wrong, and it is wrong, to
subjectpeopleofthiskind,whohavedemonstratedtheirinitiative,theirambitionandtheirabilitytogetahead,totheleveling
processesofseniority,uniformityandstandardizationthattheSupremeCourtrecognizesasbeingfundamentalprinciplesof
unionism.(J.I.CaseCo.v.NationalLaborRelationsBoard,321U.S.332,88L.Ed.762,64S.Ct.576(1994).Itiswrongfor
the foremen, for it discourages the things in them that made them foremen in the first place.For the same reason, that it
discouragesthosebestqualifiedtogetahead,itiswrongforindustry,andparticularlyforthefuturestrengthandproductivity
of our country.15 In the Philippines, the question whether managerial employees have a right of self

organizationhasarisenwithrespecttofirstlevelmanagersorsupervisors,asshownbyareviewof
thecourseoflaborlegislationinthiscountry.
RightofSelfOrganizationofManagerialEmployeesunderPreLaborCodeLaws
BeforethepromulgationoftheLaborCodein1974,thefieldoflaborrelationswasgovernedby
theIndustrialPeaceAct(R.A.No.875).
Inaccordancewiththegeneraldefinitionabove,thislawdefined"supervisor"asfollows:
SECTION2....
(k)"Supervisor"meansanypersonhavingauthorityintheinterestofanemployer,tohire,transfer,
suspend,layoff,recall,discharge,assign,recommend,ordisciplineotheremployees,orresponsibly
todirectthem,andtoadjusttheirgrievances,oreffectivelytorecommendsuchacts,if,inconnection
withtheforegoing,theexerciseofsuchauthorityisnotofamerelyroutinaryorclericalnaturebut
requirestheuseofindependentjudgment.[16]16
Therightofsupervisorstoformtheirownorganizationswasaffirmed:
SEC.3.Employees'RighttoSelfOrganization.Employeesshallhavetherighttoselforganization
andtoform,joinorassistlabororganizationsoftheirownchoosingforthepurposeofcollective
bargainingthroughrepresentativesoftheirownchoosingandtoengageinconcertedactivitiesforthe
purposeofcollectivebargainingandothermutualaidandprotection.Individualsemployedas
supervisorsshallnotbeeligibleformembershipinalabororganizationofemployeesundertheir
supervisionbutmayformseparateorganizationsoftheirown.[17]
Foritspart,theSupremeCourtupheldinseveralofitsdecisionstherightofsupervisorstoorganize
for purposes of labor relations.[18]v. Filoil Supervisory and Confidential Employees Association, 6
SCRA 522 (1972) Kapisanan ng mga Manggagawa sa Manila Railroad Co. v. CIR, 106 Phil 607
(1959).18
Although it had a definition of the term "supervisor," the Industrial Peace Act did not define the
term "manager." But, using the commonlyunderstood concept of "manager," as above stated, it is
apparentthatthelawusedtheterm"supervisors"torefertothesubgroupof"managerialemployees"
knownasfrontlinemanagers.Theothersubgroupof"managerialemployees,"knownasmanagers
perse,wasnotcovered.
However,inCaltexFilipinoManagersandSupervisorsAssociationv.CourtofIndustrialRelations,
the right of all managerial employees to selforganization was upheld as a general
proposition,thus:
[19]J.)19

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ItwouldbegoingtoofartodismisssummarilythepointraisedbyrespondentCompanythatofthe
allegedidentityofinterestbetweenthemanagerialstaffandtheemployingfirm.Thatshouldordinarily
bethecase,especiallysowherethedisputeisbetweenmanagementandtherankandfile.Itdoes
notnecessarilyfollowthoughthatwhatbindsthemanagerialstafftothecorporationforeclosesthe
possibilityofconflictbetweenthem.Therecouldbearealdifferencebetweenwhatthewelfareofsuch
grouprequiresandtheconcessionsthefirmiswillingtogrant.Theirneedsmightnotbeattendedto
thenintheabsenceofanyorganizationoftheirown.Noristhistoindulgeinemptytheorizing.The
recordofrespondentCompany,eventheverycasecitedbyit,isproofenoughoftheiruneasyand
troubledrelationship.Certainlytheimpressionisdifficulttoerasethatanalienfirmfailedtomanifest
sympathyfortheclaimsofitsFilipinoexecutives.Topredicateundersuchcircumstancesthat
agreementinevitablymarkstheirrelationship,ignoringthatdiscordwouldnotbeunusual,istoflyin
thefaceofreality.
...Thebasicquestioniswhetherthemanagerialpersonnelcanorganize.Whatrespondent
Companyfailedtotakeintoaccountisthattherighttoselforganizationisnotmerelyastatutory
creation.ItisfortifiedbyourConstitution.Allarefreetoexercisesuchrightunlesstheirpurposeis
contrarytolaw.Certainlyitwouldbetoattachunorthodoxyto,nottosayanemasculationof,the
conceptoflawifmanagersassuchwereprecludedfromorganizing.Havingdonesoandhavingbeen
dulyregistered,asdidoccurinthiscase,theirunionisentitledtoalltherightsunderRepublicActNo.
875.ConsideringwhatisdenominatedasunfairlaborpracticeunderSection4ofsuchActandthe
factssetforthinourdecision,therecanbeonlyoneanswertotheobjectionraisedthatnounfairlabor
practicecouldbecommittedbyrespondentCompanyinsofarasmanagerialpersonnelisconcerned.
Itis,asisquiteobvious,inthenegative.[20]20
Actually,thecaseinvolvedfrontlinemanagersorsupervisorsonly,astheplantillaofemployees,
quotedinthemainopinion,[21]J.)(emphasisadded).21clearlyindicates:
CAFIMSAmembersholdingthefollowingSupervisoryPayrollPositionTitleareRecognizedbythe
Company
PayrollPositionTitle
AssistanttoMgr.NationalAcct.Sales
Jr.SalesEngineer
RetailDevelopmentAsst.
StaffAsst.0Marketing
SalesSupervisor
SupervisoryAssistant
Jr.SupervisoryAssistant
CreditAssistant
Lab.Supvr.Pandacan
Jr.SalesEngineerB
OperationsAssistantB
FieldEngineer
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Sr.Opers.Supvr.MIAA/S
PurchasingAssistant
Jr.ConstructionEngineer
St.SalesSupervisor
DeportSupervisorA
TerminalAccountantB
Merchandiser
Dist.SalesProm.Supvr.
Instr.Merchandising
Asst.Dist.AccountantB
Sr.Opers.Supervisor
Jr.SalesEngineerA
Asst.BulkTer.Supt.
Sr.Opers.Supvr.
CreditSupervisorA
Asst.StoresSupvr.A
Ref.SupervisoryDraftsman
RefineryShiftSupvr.B
Asst.Supvr.AOperations(Refinery)
RefineryShiftSupvr.B
Asst.Lab.Supvr.A(Refinery)
St.ProcessEngineerB(Refinery)
Asst.Supvr.AMaintenance(Refinery)
Asst.Supvr.BMaintenance(Refinery)
SupervisoryAccountant(Refinery)
CommunicationsSupervisor(Refinery)
Finally,alsodeemedincludedareallotheremployeesexcludedfromtherankandfileunionsbut
notclassifiedasmanagerialorotherwiseexcludablebylaworapplicablejudicialprecedents.
RightofSelfOrganizationofManagerialEmployeesundertheLaborCode
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Thus,thedictumintheCaltexcasewhichallowedatleastforthetheoreticalunionizationoftop
and middle managers by assimilating them with the supervisory group under the broad phrase
"managerialpersonnel,"providedthelynchpinforlaterlawsdenyingtherightofselforganizationnot
only to top and middle management employees but to front line managers or supervisors as well.
Following the Caltex case, the Labor Code, promulgated in 1974 under martial law, dropped the
distinctionbetweenthefirstandsecondsubgroupsofmanagerialemployees.Insteadoftreatingthe
terms "supervisor" and "manager" separately, the law lumped them together and called them
"managerialemployees,"asfollows:
ART.212.Definitions....
(k)"ManagerialEmployee"isonewhoisvestedwithpowersorprerogativestolaydownandexecute
managementpoliciesand/ortohire,transfer,suspend,layoff,recall,discharge,assignordiscipline
employees,ortoeffectivelyrecommendsuchmanagerialactions.Allemployeesnotfallingwithinthis
definitionareconsideredrankandfileemployeesforpurposesofthisBook.[22]22
Thedefinitionshowsthatitisactuallyacombinationofthecommonlyunderstooddefinitionsofboth
groupsofmanagerialemployees,grammaticallyjoinedbythephrase"and/or."
Thisgeneraldefinitionwasperhapslegallynecessaryatthattimefortworeasons.First,the1974
Code denied supervisors their right to selforganize as theretofore guaranteed to them by the
IndustrialPeaceAct.Second,itstoodthedictumintheCaltexcaseonitsheadbyprohibitingalltypes
ofmanagersfromformingunions.TheexplicitgeneralprohibitionwascontainedinthethenArt.246
oftheLaborCode.
ThepracticaleffectofthissynthesisoflegalconceptswasmadeapparentintheOmnibusRules
Implementing the Labor Code which the Department of Labor promulgated on January 19, 1975.
BookV,RuleII,11oftheRulesprovided:
Supervisoryunionsandunionsofsecurityguardstoceaseoperation.Allexistingsupervisoryunions
andunionsofsecurityguardsshall,upontheeffectivityoftheCode,ceasetooperateassuchand
theirregistrationcertificatesshallbedeemedautomaticallycancelled.However,existingcollective
agreementswithsuchunions,thelifeofwhichextendsbeyondthedateofeffectivityoftheCode,
shallberespecteduntiltheirexpirydateinsofarastheeconomicbenefitsgrantedthereinare
concerned.
Membersofsupervisoryunionswhodonotfallwithinthedefinitionofmanagerialemployeesshall
becomeeligibletojoinorassisttherankandfilelabororganization,andifnoneexists,toformor
assistintheformingofsuchrankandfileorganization.Thedeterminationofwhoaremanagerial
employeesandwhoarenotshallbethesubjectofnegotiationbetweenrepresentativesofthe
supervisoryunionandtheemployer.Ifnoagreementisreachedbetweentheparties,eitherorbothof
themmaybringtheissuetothenearestRegionalOfficefordetermination.
The Department of Labor continued to use the term "supervisory unions" despite the demise of
thelegaldefinitionof"supervisor"apparentlybecausetheseweretheunionsoffrontlinemanagers
whichwerethenallowedasaresultofthestatutorygrantoftherightofselforganizationunderthe
IndustrialPeaceAct.HadtheDepartmentofLaborseenfittosimilarlybanunionsoftopandmiddle
managerswhichmayhavebeenformedfollowingthedictuminCaltex,itobviouslywouldhavedone
so.Yetitdidnot,apparentlybecausenosuchunionsoftopandmiddlemanagersreallythenexisted.
RealIntentofthe1986ConstitutionalCommission

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ThiswasthelawasitstoodatthetimetheConstitutionalCommissionconsideredthedraftofArt.
III,8.Commissioner Lerum sought to amend the draft of what was later to become Art. III, 8 of the
presentConstitution:
MR.LERUM.MyamendmentisonSection7,page2,line19,whichistoinsertbetweenthewords
"people"and"to"thefollowing:WHETHEREMPLOYEDBYTHESTATEORPRIVATE
ESTABLISHMENTS.Inotherwords,thesectionwillnowreadasfollows:"Therightofthepeople
WHETHEREMPLOYEDBYTHESTATEORPRIVATEESTABLISHMENTStoformassociations,
unions,orsocietiesforpurposesnotcontrarytolawshallnotbeabridged."[23]23
Explaininghisproposedamendment,hestated:
MR.LERUM.Underthe1935BillofRights,therighttoformassociationsisgrantedtoallpersons
whetherornottheyareemployedinthegovernment.Underthatprovision,weallowunionsinthe
government,ingovernmentownedandcontrolledcorporationsandinotherindustriesintheprivate
sector,suchasthePhilippineGovernmentEmployees'Association,unionsintheGSIS,theSSS,the
DBPandothergovernmentownedandcontrolledcorporations.Also,wehaveunionsofsupervisory
employeesandofsecurityguards.Butwhatistragicaboutthisisthatafterthe1973Constitutionwas
approvedandinspiteofanexpressrecognitionoftherighttoorganizeinP.D.No.442,knownasthe
LaborCode,therightofgovernmentworkers,supervisoryemployeesandsecurityguardstoform
unionswasabolished.
Andwehavebeenfightingagainstthisabolition.Ineverytripartiteconferenceattendedbythe
government,managementandworkers,wehavealwaysbeeninsistingonthereturnoftheserights.
However,boththegovernmentandemployersopposedourproposal,sonothingcameoutofthisuntil
thisweekwhenweapprovedaprovisionwhichstates:
Notwithstandinganyprovisionofthisarticle,therighttoselforganizationshallnotbedeniedto
governmentemployees.
Weareafraidthatwithoutanycorrespondingprovisioncoveringtheprivatesector,thesecurity
guards,thesupervisoryemployeesormajorityemployees[sic]willstillbeexcluded,andthatisthe
purposeofthisamendment.
Iwillbeverygladtoacceptanykindofwordingaslongasitwillamounttoabsoluterecognitionof
privatesectoremployees,withoutexception,toorganize.
THEPRESIDENT.WhatdoestheCommitteesay?
FR.BERNAS.Certainly,thesenseisveryacceptable,butthepointraisedbyCommissionerRodrigo
iswelltaken.Perhaps,wecanlengthenthisalittlebitmoretoread:"Therightofthepeople
WHETHERUNEMPLOYEDOREMPLOYEDBYSTATEORPRIVATEESTABLISHMENTS."
Iwanttoavoidalsothepossibilityofhavingthisinterpretedasapplicableonlytotheemployed.
MR.DELOSREYES.Willtheproponentacceptanamendmenttotheamendment,Madam
President?
MR.LERUM.Yes,aslongasitwillcarrytheideathattherightoftheemployeesintheprivatesector
isrecognized.[24]
Lerum thus anchored his proposal on the fact that (1) government employees, supervisory
employees, and security guards, who had the right to organize under the Industrial Peace Act, had
been denied this right by the Labor Code, and (2) there was a need to reinstate the right of these
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employees. In consonance with his objective to reinstate the right of government, security, and
supervisoryemployeestoorganize,Lerumthenmadehisproposal:
MR.LERUM.Mr.PresidingOfficer,afteraconsultationwithseveralMembersofthisCommission,my
amendmentwillnowreadasfollows:"TherightofthepeopleINCLUDINGTHOSEEMPLOYEDIN
THEPUBLICANDPRIVATESECTORStoformassociations,unions,orsocietiesforpurposesnot
contrarytolawshallnotbeabridged.InproposingthatamendmentIasktomakeofrecordthatIwant
thefollowingprovisionsoftheLaborCodetobeautomaticallyabolished,whichread:
ART.245.Securityguardsandotherpersonnelemployedfortheprotectionandsecurityofthe
person,propertiesandpremisesoftheemployersshallnotbeeligibleformembershipinalabor
organization.
ART.246.Managerialemployeesarenoteligibletojoin,assist,andformanylabororganization.
THEPRESIDINGOFFICER(Mr.Bengzon).WhatdoestheCommitteesay?
FR.BERNAS.TheCommitteeaccepts.
THEPRESIDINGOFFICER.(Mr.Bengzon)TheCommitteehasacceptedtheamendment,as
amended.
Isthereanyobjection?(Silence)TheChairhearsnonetheamendment,asamended,isapproved.[25]
The question is what Commissioner Lerum meant in seeking to "automatically abolish" the then
Art. 246 of the Labor Code. Did he simply want "any kind of wording as long as it will amount to
absolute recognition of private sector employees, without exception, to organize"?[26] Or, did he
insteadintendtohavehiswordstakeninthecontextofthecausewhichmovedhimtoproposethe
amendment in the first place, namely, the denial of the right of supervisory employees to organize,
becausehesaid,"Weareafraidthatwithoutanycorrespondingprovisioncoveringtheprivatesector,
securityguards,supervisoryemployeesormajority[of]employeeswillstillbeexcluded,andthatisthe
purposeofthisamendment"?[27]
It would seem that Commissioner Lerum simply meant to restore the right of supervisory
employeestoorganize.Foreventhoughhespokeoftheneedto"abolish"Art.246oftheLaborCode
which,asalreadystated,prohibited"managerialemployees"ingeneralfromformingunions,thefact
was that in explaining his proposal, he repeatedly referred to "supervisory employees" whose right
under the Industrial Peace Act to organize had been taken away by Art. 246. It is noteworthy that
CommissionerLerumneverreferredtothethendefinitionof"managerialemployees"inArt.212(m)of
theLaborCodewhichputtogether,underthebroadphrase"managerialemployees,"topandmiddle
managersandsupervisors.Instead,hisrepeateduseoftheterm"supervisoryemployees,"whensuch
termthenwasnolongerinthestatutebooks,suggestsaframeofmindthatremainedgroundedinthe
languageoftheIndustrialPeaceAct.
NordidLerumeverrefertothedictuminCaltexrecognizingtherightofallmanagerialemployees
toorganize,despitethefactthattheIndustrialPeaceActdidnotexpresslyprovidefortherightoftop
andmiddlemanagerstoorganize.IfLerumwasawareoftheCaltexdictum,thenhisinsistenceonthe
use of the term "supervisory employees" could only mean that he was excluding other managerial
employees from his proposal. If, on the other hand, he was not aware of the Caltex statement
sustainingtherighttoorganizetotopandmiddlemanagers,thenthemoreshouldhisrepeateduseof
theterm"supervisoryemployees"betakenatfacevalue,asithadbeendefinedinthethenIndustrial
PeaceAct.
At all events, that the rest of the Commissioners understood his proposal to refer solely to
supervisors and not to other managerial employees is clear from the following account of
CommissionerJoaquinG.Bernas,whowrites:
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Inpresentingthemodificationonthe1935and1973texts,CommissionerEulogioR.Lerumexplained
thatthemodificationincludedthreecategoriesofworkers:(1)governmentemployees,(2)supervisory
employees,and(3)securityguards.Lerummadeofrecordtheexplicitintenttorepealprovisionsof
P.D.442,theLaborCode.Theprovisionsreferredtowere:
ART.245.Securityguardsandotherpersonnelemployedfortheprotectionandsecurityofthe
person,propertiesandpremisesoftheemployersshallnotbeeligibleformembershipinalabor
organization.
ART.246.Managerialemployeesarenoteligibletojoin,assist,andformanylabororganization.[28]28
ImplicationsoftheLerumProposal
Insum,Lerum'sproposaltoamendArt.III,8ofthedraftConstitutionbyincludinglaborunionsin
theguaranteeoforganizationalrightshouldbetakeninthecontextofstatementsthathisaimwasthe
removal of the statutory ban against security guards and supervisory employees joining labor
organizations. The approval by the Constitutional Commission of his proposal can only mean,
therefore, that the Commission intended the absolute right to organize of government workers,
supervisory employees, and security guards to be constitutionally guaranteed. By implication, no
similar absolute constitutional right to organize for labor purposes should be deemed to have been
grantedtotoplevelandmiddlemanagers.Astothemtherightofselforganizationmayberegulated
andevenabridgedconformablytoArt.III,8.
ConstitutionalityofArt.245
Finally, the question is whether the present ban against managerial employees, as embodied in
Art.245(whichsupersededArt.246)oftheLaborCode,isvalid.Thisprovisionreads:
ART.245.Ineligibilityofmanagerialemployeestojoinanylabororganizationrightofsupervisory
employees.Managerialemployeesarenoteligibletojoin,assistorformanylabororganization.
Supervisoryemployeesshallnotbeeligibleformembershipinalabororganizationoftherankandfile
employeesbutmayjoin,assistorformseparatelabororganizationsoftheirown.[29]29
This provision is the result of the amendment of the Labor Code in 1989 by R.A. No. 6715,
otherwiseknownastheHerreraVelosoLaw.UnliketheIndustrialPeaceActortheprovisionsofthe
Labor Code which it superseded, R.A. No. 6715 provides separate definitions of the terms
"managerial"and"supervisoryemployees,"asfollows:
ART.212.Definitions....
(m)"managerialemployee"isonewhoisvestedwithpowersorprerogativestolaydownandexecute
managementpoliciesand/ortohiretransfer,suspend,layoff,recall,discharge,assignordiscipline
employees.Supervisoryemployeesarethosewho,intheinterestoftheemployer,effectively
recommendsuchmanagerialactionsiftheexerciseofsuchauthorityisnotmerelyroutinaryorclerical
innaturebutrequirestheuseofindependentjudgment.Allemployeesnotfallingwithinanyofthe
abovedefinitionsareconsideredrankandfileemployeesforpurposesofthisBook.
Although the definition of "supervisory employees" seems to have been unduly restricted to the
last phrase of the definition in the Industrial Peace Act, the legal significance given to the phrase
"effectively recommends" remains the same. In fact, the distinction between top and middle
managers, who set management policy, and frontline supervisors, who are merely responsible for
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ensuringthatsuchpoliciesarecarriedoutbytherankandfile,isarticulatedinthepresentdefinition.
[30]30 When read in relation to this definition in Art. 212(m), it will be seen that Art. 245 faithfully
carriesouttheintentoftheConstitutionalCommissioninframingArt.III,8ofthefundamentallaw.
Nor is the guarantee of organizational right in Art. III, 8 infringed by a ban against managerial
employees forming a union. The right guaranteed in Art. III, 8 is subject to the condition that its
exerciseshouldbeforpurposes"notcontrarytolaw."InthecaseofArt.245,thereisarationalbasis
forprohibitingmanagerialemployeesfromformingorjoininglabororganizations.AsJusticeDavide,
Jr.,himselfaconstitutionalcommissioner,saidinhisponenciainPhilipsIndustrialDevelopment,Inc.
v.NLRC:[31]31
Inthefirstplace,alltheseemployees,withtheexceptionoftheserviceengineersandthesalesforce
personnel,areconfidentialemployees.TheirclassificationassuchisnotseriouslydisputedbyPEO
FFWthefive(5)previousCBAsbetweenPIDIandPEOFFWexplicitlyconsideredthemas
confidentialemployees.Bytheverynatureoftheirfunctions,theyassistandactinaconfidential
capacityto,orhaveaccesstoconfidentialmattersof,personswhoexercisemanagerialfunctionsin
thefieldoflaborrelations.Assuch,therationalebehindtheineligibilityofmanagerialemployeesto
form,assistorjointalaborunionequallyappliestothem.
InBulletinPublishingCo.,Inc.v.Hon.AugustoSanchez,thisCourtelaboratedonthisrationale,thus:
"...Therationaleforthisinhibitionhasbeenstatedtobe,becauseifthesemanagerialemployees
wouldbelongtoorbeaffiliatedwithaUnion,thelattermightnotbeassuredoftheirloyaltytothe
Unioninviewofevidentconflictofinterests.TheUnioncanalsobecomecompanydominatedwith
thepresenceofmanagerialemployeesinUnionmembership."[32]
Tobesure,theCourtinPhilipsIndustrialwasdealingwiththerightofconfidentialemployeesto
organize.Butthesamereasonfordenyingthemtherighttoorganizejustifiesevenmorethebanon
managerial employees from forming unions.After all, those who qualify as top or middle managers
are executives who receive from their employers information that not only is confidential but also is
not generally available to the public, or to their competitors, or to other employees. It is hardly
necessary to point out that to say that the first sentence of Art. 245 is unconstitutional would be to
contradictthedecisioninthatcase.
WHEREFORE,thepetitionisDISMISSED.
SOORDERED.
Narvasa,C.J.,Regalado,Romero,Bellosillo,Martinez,andPurisima,JJ.,concur.
Davide,Melo,Puno,Vitug,Kapunan,Panganiban,andQuisumbing,JJ.,hasseparate,concurring
anddissentingopinion.
[1]JAMESA.F.STONER&CHARLESWANKEL,MANAGEMENT11(3rd.ed.,1987).
[2]Id.(emphasisadded)
[3]AtlanticGulf&Pac.Co.ofManilav.Cir113Phil.650(1961).
[4]Record,pp.5354.
[5]177SCRA93(1989).
[6]Id.,p.1006
[7]NasipitLumberCo.
[8]99Phil.497(1956).
[9]G.R.No.108996,Feb.20,1998.
[10]NasipitLumberCo.
[11]B.F.GoodrichPhilippines,Inc.
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[12]DOLERecord,pp.144145.
[13]Rollo,p.46(emphasisinoriginal).
[14]Record,pp.133141.
[15]TherationaleforexcludingsupervisorsintheUnitedStatesisgivenintheReportoftheCommitteeonEducationand
LaboroftheU.S.HouseofRepresentatives,quotedinNLRB
[16]R.A.No.875(1953),2(k).
[17]Id.,3.17
[18]E.g.,FiloilRefineryCorp.
[19]47SCRA112(1972)(res.onmotionforreconsideration,perFernando,
[20]47SCRAat115117.
[21]44SCRA350,363,n.3(1972)(perVillamor,
[22]LABORCODE,ART,212(m).
[23]1RECORDOFTHECONSTITUTIONALCOMMISSION761(SessionofJuly18,1986)
[24]Id.,(emphasisadded).
[25]Id.,p.762(emphasisadded).
[26]Id.,at.761.
[27]Ibid.
[28]THE1987CONSTITUTIONOFTHEREPUBLICOFTHEPHILIPPINES:ACOMMENTARY340341(1996).
[29]LABORCODE,ART.245,asamendedbyR.A.No.6715,18.
[30]2CESARIOA.AZUCENA,THELABORCODEWITHCOMMENTSANDCASES172173(1996).
[31]210SCRA339(1992).
[32]Id.,at347348.

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